Yahoo Finance How Should Investors React To Serco Group plc's (LON:SRP) CEO Pay?
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Rupert Soames became the CEO of Serco Group plc (LON:SRP) in 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Serco Group
How Does Rupert Soames's Compensation Compare With Similar Sized Companies?
Our data indicates that Serco Group plc is worth UK£1.6b, and total annual CEO compensation is UK£4.5m. (This is based on the year to December 2018). That's a notable increase of 22% on last year. While we always look at total compensation first, we note that the salary component is less, at UK£850k. We examined companies with market caps from UK£789m to UK£2.5b, and discovered that the median CEO total compensation of that group was UK£1.4m.
As you can see, Rupert Soames is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Serco Group plc is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Serco Group has changed over time.
Is Serco Group plc Growing?
Over the last three years Serco Group plc has grown its earnings per share (EPS) by an average of 101% per year (using a line of best fit). In the last year, its revenue is down -3.9%.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. It could be important to check this free visual depiction of what analysts expect for the future.
Has Serco Group plc Been A Good Investment?
Serco Group plc has served shareholders reasonably well, with a total return of 26% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
We examined the amount Serco Group plc pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Serco Group (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
